Iranian state TV denied claims Saturday that the country had banned extending letters of credit to finance imports from the UAE. The Mehr news agency had reported on Friday an announcement from Parliamentarian Gholam-Reza Mesbahi-Moghaddam that such financing had been banned. Additionally, the Iranian media had reported Tuesday that all trade between the two countries would be suspended. The UAE has been a conduit of goods to Iran over the course of the sanctions against it.

Mesbahi-Moghaddam had been quoted as saying, "Iran's neighboring countries such as the UAE should resist the meaningless pressure imposed by arrogant powers so that they can continue their economic relations with the Islamic state." Despite the contradiction of Meshabi-Moghaddam's statement, it is clear that sanctions are having an impact on Iranian merchants operating out of the UAE.

According to Morteza Masoumzadeh, executive committee of local Iranian Business Council and managing director of Jumbo Line Shipping Agency, there are over 8,000 registered Iranian traders and trading firms in Dubai. He estimated that the latest round of sanctions against Iran would drive most merchants out of business within a year or two, including those handling permitted items.

US-led sanctions against Iranian banks have led banks from countries that permit financial ties with the Islamic Republic to avoid providing financing for fear of jeopardizing US business or being exposed if sanctions are expanded. "We cannot establish letters of credit to our suppliers in Europe or the Far East. They cannot send the goods to us, and we cannot do the trade. Therefore, our trade department has lost at least 70 percent of its business during the last two years," said Masoumzadeh.

The latest data from UAE customs indicates that re-export accounted for AED19.5 billion ($5.32 billion) in trade between the two the countries. This represents a significant portion of Iran's non-oil foreign trade. Goods exported by dhow to Iran include household goods, rice, sugar, cooking oil, tubes, tires, and limber. Although Iran accounts for a quarter of the UAE's re-export trade, the impact of the sanctions are limited on the UAE, which exports nearly $300 billion in oil and gas. The financing issue has shifted some of Iranian trade to Asia, including to Pakistan. (Source: english.nuqudy.com)